Correlation Between Wingstop and Planet Fitness
Can any of the company-specific risk be diversified away by investing in both Wingstop and Planet Fitness at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Wingstop and Planet Fitness into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wingstop and Planet Fitness, you can compare the effects of market volatilities on Wingstop and Planet Fitness and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Wingstop with a short position of Planet Fitness. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wingstop and Planet Fitness.
Diversification Opportunities for Wingstop and Planet Fitness
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Wingstop and Planet is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Wingstop and Planet Fitness in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Planet Fitness and Wingstop is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Wingstop are associated (or correlated) with Planet Fitness. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Planet Fitness has no effect on the direction of Wingstop i.e., Wingstop and Planet Fitness go up and down completely randomly.
Pair Corralation between Wingstop and Planet Fitness
Given the investment horizon of 90 days Wingstop is expected to under-perform the Planet Fitness. In addition to that, Wingstop is 1.86 times more volatile than Planet Fitness. It trades about -0.03 of its total potential returns per unit of risk. Planet Fitness is currently generating about 0.36 per unit of volatility. If you would invest 8,173 in Planet Fitness on August 26, 2024 and sell it today you would earn a total of 1,980 from holding Planet Fitness or generate 24.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wingstop vs. Planet Fitness
Performance |
| Timeline |
| Wingstop |
| Planet Fitness |
Wingstop and Planet Fitness Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wingstop and Planet Fitness
The main advantage of trading using opposite Wingstop and Planet Fitness positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wingstop position performs unexpectedly, Planet Fitness can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Planet Fitness will offset losses from the drop in Planet Fitness' long position.| Wingstop vs. Papa Johns International | Wingstop vs. Chipotle Mexican Grill | Wingstop vs. The Wendys Co | Wingstop vs. Dominos Pizza |
| Planet Fitness vs. Life Time Group | Planet Fitness vs. Bowlero Corp | Planet Fitness vs. JAKKS Pacific | Planet Fitness vs. Six Flags Entertainment |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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